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CLOSING the GENDER WAGE GAP: a Background Paper

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CLOSING the GENDER WAGE GAP: a Background Paper October 2015 CLOSING THE GENDER WAGE GAP: A Background Paper Ministry of Labour Contents 3 Introduction 4 Context 4 Provincial Mandate 5 Canada’s International Obligations 5 Imperative 9 Key Concepts 9 The Gender Wage Gap and Earnings Ratios 9 Measures of Earnings, Wages, Income and Work 10 Measures of Central Tendency 10 Decomposing the Gender Wage Gap 11 Significant Ontario Legislation 12 Intersectional Discrimination 13 Ontario Data 13 Snapshot 23 Trends 30 Decomposition 33 Key Factors Associated with the Gender Wage Gap 33 Discrimination 35 Occupational Segregation 38 Caregiving Activities 41 Workplace Culture 46 Education 48 Case Study: The Nordic Countries 51 Conclusion 52 Bibliography Closing the Gender Wage Gap: A Background Paper 3 Introduction Women in Ontario have made significant progress in areas such as labour force participation and education. Yet, they continue to earn less than men. Women are overrepresented 1 in lower-paying occupations and industries, make up a disproportionate number of employees in minimum wage and part-time positions, and remain underrepresented in many higher paying jobs and sectors that have traditionally been male-dominated. Closing Ontario’s gender wage gap has been made a priority by the Premier. The responsibility for a Gender Wage Gap Strategy (the Strategy) has been given to the Minister of Labour, with support from Minister Responsible for Women’s Issues. It is increasingly recognized that the gender wage gap – the difference between the earnings of men and women – represents lost economic opportunities. This paper provides an overview of some key information to inform those who seek more detail when participating in the discussions to create recommendations for the Strategy. The paper will begin by going over the context and imperative for the Strategy. This will be followed by a section on key concepts that will allow for a better understanding of the ideas and data presented throughout the paper. Next, Ontario data are presented, followed by a discussion of factors commonly associated with the gender wage gap. As a model for innovative practices, the Nordic countries (where gender wage gaps are among the smallest in the developed world) will be reviewed. The information in this paper is not exhaustive. It is based on research and data readily available at the time of writing. Research into a variety of areas related to the gender wage gap is ongoing. 1 Overrepresented is a term used to describe when a category includes a disproportionately large number of (a particular category or type of person). It is mainly used in reference to statistical studies. 4 Ministry of Labour Context Provincial Mandate In the Minister of Labour’s 2014 Mandate Letter, the Premier charged the Minister with leading the development of a wage strategy, stating: “Women make up an integral part of our economy and society, but on average still do not earn as much as men. You will work with the Minister Responsible for Women’s Issues and other ministers to develop a wage gap strategy that will close the gap between men and women in the context of the 21st century economy.” 2 The Mandate Letter of the Minister Responsible for Women’s Issues directed her to support the Minister of Labour in the development of a wage gap strategy. The Strategy will take into account the recommendations of a Gender Wage Gap Strategy Steering Committee. Two External Advisors -Linda Davis and Dr. Parbudyal Singh- have been appointed to the committee by the Minister of Labour. The Pay Equity Commissioner -Emanuela Heyninck- and the MOL Executive Lead -Nancy Austin- are ex officio members of the committee. The committee will examine how the gender wage gap affects women at work, in their family, and in their community; understand how the gender wage gap specifically affects women in the workforce across the economic spectrum; assess ways in which government, business, labour, other organizations, and individual leaders can work together to address the conditions and the systemic barriers that contribute to the wage gap; and, understand other factors that intersect with gender to compound the wage gap and determine how those factors should be addressed. The committee will seek input from the public through consultations using a variety of methods and will report back to government on the recommendations for a proposed Strategy in 2016. 3 2 Ontario Government Mandate Letter: Labour (2014). 3 Ontario Government News Release (2015). Ontario Takes Another Step to Close the Gender Wage Gap. Closing the Gender Wage Gap: A Background Paper 5 Canada’s International Obligations Canada is party to several key United Nations conventions related to women, work, and compensation. In 1951, the United Nation's International Labour Organization (ILO) adopted Convention No. 100, the Convention Concerning Equal Remuneration for Men and Women for Work of Equal Value. Canada has ratified ILO's Convention No. 100. 4 The Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) was ratified by Canada on December 10, 1981. It provides the basis for realizing gender equality through ensuring women’s equal access to, and equal opportunities in, political and public life as well as education, health and employment. Parties agree to take all appropriate measures, including legislation and temporary special measures, so that women can enjoy all their human rights and fundamental freedoms. 5 Thus far, Canada has submitted 7 reports, the last one in May 2007 with a supplemental report submitted in February 2010. Emerging from the 1995 Beijing Declaration and Platform for Action, the Canadian federal government committed to conducting gender based analysis on all future legislation, policies and programs. Canada’s National Review on the 20th Anniversary of the Beijing Platform for Action was submitted in June 2014. 6 In another international forum, the G20 Leaders Summit in November 2014, Canada was a signatory to ‘25 by 25’ communique where they agreed to the goal of reducing the gap in participation rates between women and men by 25% by 2025, taking into account national circumstances. Further action on this item is unknown at this time. 7 Imperative Achieving greater pay equality between men and women would benefit Ontario’s economy and society at large. The gender wage gap is both an issue of fairness and an economic imperative. Failure to address this gap could undermine the competitiveness of Ontario businesses and the province’s potential for economic growth. 4 Pay Equity Office (2015). A Guide to Interpreting Ontario’s Pay Equity Act. 5 UN Women. Convention on the Elimination of All Forms of Discrimination against Women. 6 UN Women. Beijing and its Follow-up. 7 Caroline Bracht (2014). The 2014 G20 Brisbane Summit Commitments. G20 Information Centre. 6 Ministry of Labour International comparisons show that Canada may be falling behind in terms of the overall gender gap. For example, the 2014 Global Gender Gap Report by the World Economic Forum (WEF) ranked Canada 19th out of 142 countries. This is an improvement over the 2013 ranking of 20th but behind the 2006 ranking of 14th. In 2014, Canada lagged behind Germany (12th), New Zealand (14th), and all the Nordic countries, which take the top five spots. The United States, Australia, and the United Kingdom are ranked lower than Canada but remain in the top 30. 8 Canada has made little improvement in recent years according to the WEF, improving 4% from 2006 to 2014. The United States, has improved by 6% in that time. 9 Canada is falling behind in the WEF category: economic participation and opportunity. Canada was ranked 9th in in 2013 10, but slipped to 17th in 2014. The Conference Board of Canada notes that Canada has earned a C grade for its progress on the gender wage gap and ranks 11th out of 17 peer countries. 11 Closing the gender wage gap will benefit the economy. It is viewed by some as a productivity gap when women are under-employed and/or not trained to their full potential, which causes productivity losses to the entire economy. In the past decade, Ontario and Canada’s productivity has stopped growing. There has been a widening productivity gap when Ontario and Canada are compared to the United States. 12 In 2005, The Royal Bank estimated that if women in Canada had identical labour market opportunities available to them as men, then personal incomes would be $168 billion higher each year. Of this $168 billion, about $126 billion would come from equating the labour market experiences of women born in Canada to men born in Canada. 13 Businesses will also benefit from closing the gender wage gap. Women today are highly educated and highly skilled. They exceed men in university enrollment, and are prime candidates to fill future skill shortages caused by aging demographics. The number of women in the workforce has been driving the overall labor force participation rate since the 1970s. 14 As the single largest population segment 8 The World Economic Forum (2014). The Global Gender Gap Report 2014. 9 Ibid. 10 The World Economic Forum (2013). The Global Gender Gap Report 2013. 11 The Conference Board of Canada (2013). Gender Income Gap. 12 Ontario Ministry of Finance (2014). Ontario’s Long-Term Report on the Economy. 13 RBC Financial Group (2005). The Diversity Advantage: a Case for Canada’s 21st Century Economy. 14 Ontario Ministry of Finance. Closing the Gender Wage Gap: A Background Paper 7 still under-represented in paid work, women yield the highest potential to make a difference for the national labour force. Raising women’s participation in paid work by just 1% would add approximately 115,000 workers to the labour force. 15 Furthermore, women in the 25-44 age group represent the next generation for high-level decision-making and management positions.
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